2002 (8) TMI 829 - AT - VAT and Sales Tax

Issues Involved:
1. Legality of levying turnover tax on the sale of Indian-made foreign liquor (IMFL).
2. Interpretation of sections 5(2)(a) and 6B(2) of the Bengal Finance (Sales Tax) Act, 1941.
3. Validity of the orders by the Assistant Commissioner, Deputy Commissioner, and the West Bengal Commercial Taxes Appellate and Revisional Board.

Issue-wise Detailed Analysis:

1. Legality of levying turnover tax on the sale of Indian-made foreign liquor (IMFL):

The petitioner challenged the order dated June 15, 1998, by the Assistant Commissioner, Commercial Tax, Sealdah Charge, which levied turnover tax on the sale of IMFL. The petitioner argued that sales of IMFL are exempt from turnover tax under section 5(2)(a)(vf) and section 6B(2)(f) of the Bengal Finance (Sales Tax) Act, 1941. The petitioner contended that the turnover tax was unlawfully levied, as no turnover tax is payable on sales under section 5(2)(a)(vf) and 5(2)(a)(vg). The appellate and revisional orders affirming the levy were also challenged on the ground of being legally unsustainable.

2. Interpretation of sections 5(2)(a) and 6B(2) of the Bengal Finance (Sales Tax) Act, 1941:

The petitioner argued that a conjoined reading of section 5(2) and section 6B(2) makes it clear that turnover tax should not be levied on sales of IMFL. The petitioner's advocate emphasized that "sale referred to in sub-clause (v) of clause (a) of sub-section (2) of section 5 of goods, other than specified in clauses (a), (b), (c), (d) and (e)" as mentioned in section 6B(2)(f) should be deducted from the gross turnover for levying turnover tax. The advocate further argued that clauses (a), (b), (c), (d), and (e) in section 6B(2)(f) refer to sub-clauses (va) to (ve) of section 5(2)(a). However, the state representative countered that section 5 is not a charging section and merely relates to the payability of tax. He argued that deductions allowed under section 5(2) do not exempt a dealer from turnover tax under section 6B.

3. Validity of the orders by the Assistant Commissioner, Deputy Commissioner, and the West Bengal Commercial Taxes Appellate and Revisional Board:

The tribunal examined whether the decisions of the Assistant Commissioner, Deputy Commissioner, and the Board were legally sustainable. The Assistant Commissioner's order dated June 15, 1998, levied turnover tax despite allowing the petitioner's claim under section 5(2)(a)(vf). The Deputy Commissioner's appellate order dated May 11, 1999, affirmed the Assistant Commissioner's decision, interpreting that clauses (a), (b), (c), (d), and (e) in section 6B(2)(f) refer to sub-clauses of section 6B(2). The tribunal agreed with this interpretation, stating that section 6B contains a self-contained list of deductible turnover for turnover tax purposes and does not refer to sub-clauses of section 5(2)(a).

The tribunal found no illegality in the orders of the Assistant Commissioner and the Deputy Commissioner. However, it disagreed with the reasoning of the West Bengal Commercial Taxes Appellate and Revisional Board, which had considered extraneous matters not connected with the case. The tribunal struck down the irrelevant findings of the Board but upheld the ultimate order dismissing the revision petition, as it found the dismissal appropriate.

Conclusion:

The tribunal concluded that the levy of turnover tax on the petitioner-dealer was legally sustainable. It affirmed the orders of the Assistant Commissioner and the Deputy Commissioner, while partially striking down the reasoning of the West Bengal Commercial Taxes Appellate and Revisional Board. The tribunal clarified that turnover tax is an additional tax payable under section 6B, irrespective of the deductions allowed under section 5(2).

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